The Australian share market has closed around one per cent lower as investors consider the timing of the next rise in US interest rates and reposition their portfolios ahead of the Easter break.
The major banks led the market lower.
“The prime driver of things at the moment is what is being taken by the market as potentially a co-ordinated round of statements from US Fed governors just preparing the market for the possibility that we will see the next rate hike in the second quarter of this year,” CMC Markets chief market analyst Ric Spooner said.
Some US Federal Reserve officials have been talking up the chances of more than one increase in US interest rates this year.
They have highlighted the chance of at least two rate hikes this year, with the first perhaps as soon as April.
Markets had been expecting the possibility of only one lift in US interest rates this year.
Mr Spooner said the expectations of more interest rate hikes had lifted the US dollar, which in turn had created nervousness in commodities markets that are priced in US dollars.
Also, the Australian dollar was weaker, which had prompted selling by international investors, especially among the big banks.
Mr Spooner said comments by the ANZ Bank and Westpac on increased provisions for bad debts were unlikely to have had a major impact on those stocks because the banks still had very strong balance sheets.
Among the major banks, ANZ fell $1.32, or 5.21 per cent, to $24.02 after the lender said its bad debts will jump by at least $100 million for the first half of its financial year, because of its exposure to the downturn-hit resources sector.
Westpac lost $1.48, or 4.58 per cent, at $30.85 after it flagged higher debt provisions because of bad consumer loans in Western Australia and Queensland, which have been hit by the resources industry downturn.
Commonwealth Bank sagged $1.88 to $74.82, and National Australia Bank was off 96 cents at $26.26.
In the resources sector, global miner BHP Billiton retreated 60 cents to $17.00, Rio Tinto backtracked $1.56 to $42.30, and Fortescue Metals surrendered six cents to $2.57.
Oil and gas producer Santos added 11 cents to $4.03 after news that China’s ENN Group had taken an 11.7 per cent stake in the company.
Woodside Petroleum descended 19 cents to $26.94.
KEY FACTS:
* On Thursday, the benchmark S&P/ASX200 index was down 58.1 points, or 1.13 per cent, at 5,084.2 points.
* The broader All Ordinaries index was down 52.7 points, or 1.01 per cent, at 5,151.6 points.
* The June share price index futures contract was down 51 points at 5,081 points, with 29,444 contracts traded.
* The price of gold in Sydney at 1700 AEDT was $US1,219.40 per fine ounce, down $US15.40 on Wednesday’s price of $US1,234.80.
* National turnover was 2.2 billion securities traded, worth $7.5 billion.
